ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The policyholder pays a certain amount called ‘premium’ to the insurance company against which the latter provides insurance cover. The insurer assures that it shall cover the policyholder’s losses subject to certain terms and conditions. Premium payment decides the assured sum for insurance coverage or ‘policy limit’.

Detailed explanation-2: -Risk in insurance terms In insurance terms, risk is the chance something harmful or unexpected could happen. This might involve the loss, theft, or damage of valuable property and belongings, or it may involve someone being injured.

Detailed explanation-3: -Dual insurance – having two or more policies with overlapping coverage of a risk (both the individual policies would not pay separately – under a concept named contribution, they would contribute together to make up the policyholder’s losses.

Detailed explanation-4: -Often known as a comprehensive insurance policy, an all-risk property insurance policy offers you coverage in the event of those losses or damages which arise due to perils that you do not anticipate, i.e., those perils which do not fall under the named peril list.

Detailed explanation-5: -Insurable Types of Risk There are generally 3 types of risk that can be covered by insurance: personal risk, property risk, and liability risk. Personal risk is any risk that can affect the health or safety of an individual, such as being injured by an accident or suffering from an illness.